Federal judges block Biden’s latest attempt to reduce student debt

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• Geoff Bennett:

  A pair of decisions by two federal judges has put key parts of President Biden's plan for easing student loan payments on hold and their future in doubt.

  William Brangham has the details on the impact. It's the first part of a two-part focus tonight of our series Rethinking College.

• William Brangham:

  Geoff, judges in two states, Missouri and Kansas, blocked parts of the Biden administration's student loan repayment program known as SAVE.

  It offers a way for students and graduates to lower monthly payments and get some debt forgiveness. More than eight million people are currently enrolled, but these rulings put those key features on pause.

  So what does this mean for borrowers?

  Danielle Douglas-Gabriel covers higher education for The Washington Post, and she joins us again now.

  Danielle, thank you so much for being here again. Before we get into the arguments embedded in these two cases, can you just remind us what the president and the administration's student loan program was really all about? Like, who and how was the administration trying to help here?

• Danielle Douglas-Gabriel, The Washington Post:

  So, first, thanks for having me.

  And the objective here was really to try to make student loan payments more manageable for the vast majority of Americans who have education debt. And the way that this would work is protecting more of the income that they earn from the calculation that determines their monthly bills.

  This is really built on a plan that has been in existence for 30 years in one iteration or the next, and really just makes it far more generous than what we have seen in the past by making sure that people wouldn't be kind of saddled with unaffordable loan payments while they're trying to afford their mortgages or rents or car payments.

  However, the generosity of this plan is what's at issue here and whether or not the Biden administration has legal authority to make such sweeping economic changes without congressional approval.

• William Brangham:

  And what was the administration's argument for why people who had knowingly taken on debt should get this forgiveness or a reduction in their payments?

• Danielle Douglas-Gabriel:

  Well, honestly, this plan in one iteration or the next has existed since 1993. And the idea was always let's make sure that people aren't drowning in their student loans as they're trying to make a life for themselves.

  But the difference here is the amount of loan forgiveness and the fast path towards loan forgiveness that this plan offered compared to some of the older plans under this suite of income-driven repayment plans.

• William Brangham:

  So these two suits were brought by this consortium of Republican attorneys general in different states and ruled on by two judges appointed by former President Obama.

  What were they arguing about what's illegal here?

• Danielle Douglas-Gabriel:

  Both of the judges started to question whether the Higher Education Act, which the plan, the SAVE plan, is rooted in, really afforded the administration to make such sweeping changes without congressional approval.

  They were questioning that, and they believe that both of these cases have enough merit to move forward. Both judges also questioned whether, once all of these loans are forgiven, whether there is a potential for states to really miss out on a lot of revenue. Keep in mind, because of a law that was passed during the pandemic, people who have their student loans forgiven any time before December of 2025 don't have to pay state and federal taxes on it.

  And so the states that are involved in this said, hey, we're going to miss out on potential tax revenue if this plan continues on. But the Education Department and the Biden administration has said there are lots of other student loan forgiveness plans that are currently in play and creating the same kind of potential harm, and why aren't you going after those?

• William Brangham:

  So, with these two rulings, what does this mean for the people who are currently — I think it's eight million or plus people who are currently in that plan? What happens to them now? Do their payments suddenly start to go up?

  Like, what's the future look like for them?

• Danielle Douglas-Gabriel:

  So, for people who are already enrolled — and you're right — about eight million people are a part of the SAVE plan for right now — their payment structure will stay the same. Now, the challenge is the final piece of the plan that was supposed to take effect July 1 was going to cut those payments in half. So it was going to lower it even further. So they will not be able to take advantage of that.

  They will also not be able to take advantage of the loan forgiveness portion of the plan. Now, the program creates this faster path to forgiveness by saying, hey, if you borrowed less than $12,000 originally and you have been in repayment for 10 years, then we can forgive your remaining balance.

  And 400,000 people have benefited from that plan since February. But that portion has now come to a halt. And so anyone who was in the queue for that particular kind of forgiveness will not be receiving it as long as this case goes on and until it's resolved.

• William Brangham:

  So separate from the legal arguments here, how big a blow is this politically for the Biden administration, which has been trying to make a lot of efforts to younger voters to say, look, we are doing these substantive things for you? This now has got this major roadblock.

• Danielle Douglas-Gabriel:

  I mean, certainly, these decisions undermine the Biden administration's efforts to really stake out a claim as the president who has delivered the most student loan forgiveness and has been the most generous and advantageous towards borrowers.

  There's still millions of people who have benefited from Biden's suite of loan forgiveness plans and policies. And I imagine they will still continue to do so and under all the other policies that are still in play. But in this particular plan that really was a cornerstone of what the president was trying to do for borrowers and create really a legacy of trying to be more generous and understanding with people who have been saddled with education loans, this really is a hit.

  But, look, the cases are still going. We really don't know what the outcome is, but the two injunctions certainly do signal that the court is willing to entertain these arguments and could ultimately — the states could prevail.

• William Brangham:

  All right, Danielle Douglas-Gabriel of The Washington Post, thank you so much for being here again.

• Danielle Douglas-Gabriel:

  Thanks for having me.